December 4, 2013
Michigan Court Finds All Six of Plaintiff’s Claims Without Merit
The court in deciding McGlade v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 152610 (E.D. Mich. Oct. 24, 2013) granted defendant Bank of America, N.A.’s motion to dismiss.
Plaintiff, McGlade brought six causes of action: Count I-Fraudulent Misrepresentation; Count II-Estoppel; Count III-Negligence; Count IV-Violation of the state Regulation of Collection Practices Act; Count V-Violation of the Fair Debt Collection Practices Act; and Count VI-violation of the Michigan Consumer Protection Act.
The court in granting defendant summary judgment noted that the plaintiff’s factual basis for the fraudulent misrepresentation claim that defendant “knew or should have known that she would not qualify for a loan modification when she inquired about one” was insufficient.
Ultimately, the court found that the misconduct alleged by McGlade did not relate to the foreclosure procedure itself, and therefore she had failed to state a claim for which relief can be granted.
December 4, 2013 | Permalink | No Comments
Tennessee Court Grants Defendant’s Motion for Summary Judgment as Wells Fargo Had Ownership Interest in the Note & Deed
The court in deciding McKee v. Am. Brokers Conduit, 2013 U.S. Dist. LEXIS 152657 (W.D. Tenn. 2013) granted Wells Fargo’s motion for summary judgment.
Plaintiffs claimed that (1) Wells Fargo didn’t have lawful ownership or a security interest in the property because the note and deed of trust were unlawfully sold; (2) Leak was not authorized to execute the assignment from MERS to Wells Fargo; (3) Wells Fargo could not show possession or ownership of the original note or deed and therefore had an imperfect security interest; and (4) ABC had no authority to execute the assignment because it was in bankruptcy proceedings at the time of the assignment.
The court found the plaintiff’s line of reasoning factually incorrect. The court noted that the note was made payable to Wells Fargo and the deed was assigned to Wells Fargo. Both the endorsed note and the assignment agreement were recorded. Furthermore, counsel for Wells Fargo had the original note in his possession. Finally, both the note and the deed allowed for such an assignment. Plaintiffs had presented the court with no evidence to rebut these facts. As such, the plaintiffs had not offered enough to challenge Wells Fargo’s enforcement of the note and the court granted summary judgment.
December 4, 2013 | Permalink | No Comments
Michigan Court Finds Plaintiff’s Claim that Foreclosure Proceedings Violated Mich. Comp. Laws §§ 600.3204(1) and (3) Unpersuasive
The court in deciding Anderson v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 152765 (E.D. Mich. Oct. 24, 2013) dismissed plaintiff’s claims that foreclosure violated Michigan state law.
Plaintiff sought a declaratory judgment that foreclosure proceedings violated Mich. Comp. Laws §§ 600.3204(1) and (3). The basis of plaintiff’s claim was a challenge to the assignment of the mortgage from MERS to defendant. Plaintiff alleged that this assignment was invalid. Ultimately, the court found this argument has no merit.
Plaintiff contended that defendant did not have standing to foreclose on the property because the assignment of the mortgage from MERS to defendant was invalid. Plaintiff argued that TBW was no longer in business at the time MERS assigned the mortgage to the defendant. Therefore, as the plaintiff reasoned, the assignment was invalid. Additionally, plaintiff complained that the assignment was “robo-signed” and that it was insufficient to create a record chain of title.
The court concluded that the plaintiff was wrong. The court noted that the Michigan Supreme Court had made clear that, under Michigan law, a mortgage granted to MERS as nominee for lender and lender’s successors and assigns was a valid and assignable mortgage.
December 4, 2013 | Permalink | No Comments
Washington Court Denied the Plaintiff’s Motion for Preliminary Injunction
The court in deciding Cameron v. Acceptance Capital Mortg. Corp., 2013 U.S. Dist. LEXIS 151134 (W.D. Wash. 2013) denied the plaintiff’s motion for preliminary injunction.
Nearly all of plaintiffs’ claims turn on a single question: whether, under Washington law, Flagstar had legal authority to appoint NWTS as successor trustee. Plaintiffs first asserted that Flagstar could not have become a beneficiary with the power to appoint a successor trustee. Plaintiff reasoned that under Washington state law, MERS was an unlawful initial beneficiary and thus lacked the power to assign its interest to Flagstar.
In their reply brief plaintiffs raised an additional claim alleging that even if Flagstar held the note, it had sold it to Fannie Mae before appointing NWTS as successor trustee, thus it shed its authority to make this appointment when it did so. Ultimately, the Court finds both arguments unpersuasive.
First, the court found that this case is distinguishable from the cited Washington state case law, as Flagstar derived its authority to enforce the note from its position as the note holder, not from its position as assigned beneficiary. The court found plaintiffs’ second allegation, were raised improperly only upon reply, was similarly unconvincing as it rests on a misunderstanding of the law.
December 4, 2013 | Permalink | No Comments
California Court Dismisses Plaintiff’s Action Alleging Violations of RESPA, HOEPA, UCL & Negligent Misrepresentation
The court in deciding Monreal v. Deutsche Bank Nat’l Trust Co., 2013 U.S. Dist. LEXIS 151731 (S.D. Cal. Oct. 22, 2013) granted the defendants’ motion to dismiss plaintiff’s claims arising under federal law with prejudice, and declined to exercise supplemental jurisdiction over the plaintiff’s remaining state-law claims. Therefore, the remaining state-law claims are dismissed without prejudice.
Plaintiff alleged four causes of action against Deutsche Bank, GMAC, ETS, and MERS, including: (1) violation of the UCL; (2) negligent misrepresentation; (3) violation of RESPA; and (4) violation of HOEPA. In total plaintiff alleged two claims arising under federal law, RESPA and HOEPA, and two claims arising under state law, negligent misrepresentation and violation of the UCL.
In deciding the matter at hand, the court decided that their subject matter jurisdiction was premised on federal question jurisdiction over the claims arising under federal law, and supplemental jurisdiction over the pendent state-law claims.
Accordingly, because the court found that plaintiff failed to state a viable cause of action under either RESPA or HOEPA, the court dismissed the federal causes of action with prejudice, and declined to exercise supplemental jurisdiction over the remaining state-law claims.
As a result, the Court did not address the merits of the plaintiffs’ state-law causes of action.
December 4, 2013 | Permalink | No Comments
Levitin on the Uncertainty of Mortgage Title
By David Reiss
Adam Levitin has posted The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title to SSRN. This paper adds to a small (here and here, for instance), but important body of literature that seeks to harmonize the application of foreclosure laws with the Uniform Commercial Code. Levitin’s abstract reads
The mortgage foreclosure crisis raises legal questions as important as its economic impact. Questions that were straightforward and uncontroversial a generation ago today threaten the stability of a $13 trillion mortgage market: Who has standing to foreclose? If a foreclosure was done improperly, what is the effect? And what is the proper legal method for transferring mortgages? These questions implicate the clarity of title for property nationwide and pose a too- big-to-fail problem for the courts.
The legal confusion stems from the existence of competing systems for establishing title to mortgages and transferring those rights. Historically, mortgage title was established and transferred through the “public demonstration” regimes of UCC Article 3 and land recordation systems. This arrangement worked satisfactorily when mortgages were rarely transferred. Mortgage finance, however, shifted to securitization, which involves repeated bulk transfers of mortgages.
To facilitate securitization, deal architects developed alternative “contracting” regimes for mortgage title: UCC Article 9 and MERS, a private mortgage registry. These new regimes reduced the cost of securitization by dispensing with demonstrative formalities, but at the expense of reduced clarity of title, which raised the costs of mortgage enforcement. This trade-off benefitted the securitization industry at the expense of securitization investors because it became apparent only subsequently with the rise in mortgage foreclosures. The harm, however, has not been limited to securitization investors. Clouded mortgage title has significant negative externalities on the economy as a whole.
This Article proposes reconciling the competing title systems through an integrated system of note registration and mortgage recordation, with compliance as a prerequisite to foreclosure. Such a system would resolve questions about standing, remove the potential cloud to real-estate title, and facilitate mortgage financing by clarifying property rights.
I had to agree with one of his conclusions: “Reduction of transaction costs is ultimately a second-order move for commercial law. The first-order move, so elemental it is easy to forget, is clarification of the property being transferred.” (723-24) The others are pretty compelling too.
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December 4, 2013 | Permalink | No Comments